Commenting on the second quarter results, Mr. Haim Romano, CEO of
Partner noted:

“The results of the second quarter of 2014 reflect the Company’s
strength and its ability to cope with the continued and intense
competition in the telecom market. Adherence to the Company’s strategy –
which is based on creating a competitive advantage with an emphasis on
technological innovation and quality of service – was reflected this
quarter.

This quarter we recorded an increase of 4% in Adjusted EBITDA compared
to the comparable quarter last year, as a result of adapting our cost
structure and operating model to the changing business environment.
These actions contributed to an 8% decline in operating expenses. In
addition, an increase of 25% in revenues from the sale of equipment was
recorded. These two factors partially offset the continued erosion in
service revenues. This is the second consecutive quarter in which we
recorded an increase in Adjusted EBITDA in comparison to its comparable
quarter since the fourth quarter of 2010.

In the current quarter we also recorded an increase of 130% in profit,
which reflects an improvement in Adjusted EBITDA as well as lower
finance costs, net, compared to the comparable quarter last year. In
addition, we continued to reduce the Company’s net debtwhich
totaled at the end of the quarter NIS 2.7 billion. The net debt was
reduced by NIS 711 million compared to the parallel quarter last year.

Our customers’ vote of confidence is expressed by the increase – for a
fifth consecutive quarter – in the Post-Paid subscriber base. The
decrease in the total number of subscribers stems from the decline in
the Pre-Paid subscriber base, resulting, among other things, from
seasonality effects.

In July, the Company launched its 4G network, the first among the
cellular operators in Israel, following the MOC’s approval to convert a
5 MHz bandwidth which the Company owned. Our 4G network includes today
hundreds of sites deployed nationally and we estimate that the network
will include more than one thousand sites by year end. Hundreds of
thousands of our customers can already enjoy the advanced services of
LTE technology. The full implementation of the technology’s potential is
subject to a complete spectrum allocation which we estimate is expected
in early 2015 as part of the 4G tender recently published by the MOC. 4G
technology makes possible the use of new products and services, cellular
internet becomes significantly faster and enables the use of services
and applications that are based on the transfer of heavy data at high
speeds, which enhance the user experience. The experience of other
countries demonstrates that the adoption of 4G networks encourages the
use of these innovative services and advanced applications.”

Haim Romano emphasized, “The advanced network which Partner launched is
ready to provide LTE Advanced (4.5), subject to the approval by the MOC,
the allocation of the necessary spectrum to launch this technology and
the availability of supporting end user devices.

Referring to our activities in the fixed line, we are implementing the
principles of technological leadership to the fixed network. These days
we are executing a broad upgrade of the network. Our fixed line network
is at the forefront of technology and is one of the fastest networks in
Israel.

We are proud in our continued leadership position in quality of service
and are continuing to consistently improve and enhance the customer
experience, and expand the points of contact with our customers and the
breadth of services and products offered. Today we also offer customers
of all cellular operators a repair service for cellular devices within
two hours, a very wide range of devices and accessories and innovative
services which bring added value through the cellular device.”

In conclusion, Haim Romano noted, “I believe that the Company’s strength
will be maintained based on our leadership in the areas of technologies
and customer service which are our core assets.”

“During the second quarter of 2014, competition in the cellular market
continued to be intense, which resulted in a further decline in
revenues; however, at the same time, the Company continued to adjust its
cost structure and implement operational efficiency measures which,
among other things, led to a decrease of NIS 19 million in operating
expenses (excluding cost of equipment sold and depreciation &
amortization expenses) compared with the first quarter of 2014.

The cellular subscriber churn rate during the second quarter of 2014
declined to 11.4% compared to 11.6% in the previous quarter. This slight
decline follows two consecutive quarters in which the churn rate
increased.

Cellular ARPU in the second quarter of 2014 totaled NIS 76, decreasing
by NIS 1 compared with the previous quarter. The decline in ARPU
resulted primarily from continued price erosion of cellular services, a
result of the intense competition, which was partially offset by an
increase in revenues from national roaming services.

Revenues from equipment sales in the second quarter of 2014 were similar
to the previous quarter; however, gross profit from equipment sales
increased by NIS 13 million compared to the previous quarter, primarily
due to improvements in the supply chain and a change in the product mix.

Adjusted EBITDA in the second quarter of 2014 increased by NIS 17
million compared with the previous quarter, reflecting the increase in
gross profit from equipment sales and the decline in operating expenses
which were partially offset by the decline in cellular service revenues.

Finance costs, net, in this quarter increased by NIS 25 million compared
to the previous quarter, mainly due to an increase in CPI linkage
expenses and a one-time repayment fee for bank loans of NIS 6 million.

Profit in the second quarter of 2014 totaled NIS 46 million compared
with NIS 52 million in the previous quarter, reflecting the higher
finance costs, net, partially offset by the increase in adjusted EBITDA.

Free cash flow (after interest payments) in the second quarter totaled
NIS 123 million, compared with NIS 139 million in the first quarter of
2014. The decrease in free cash flow was primarily due to semi-annual
interest payments.

As of June 30, 2014, net debt amounted to approximately NIS 2.7 billion.
In April 2014, the Company made an early repayment of bank loans
totaling NIS 100 million (whose original repayment schedule was for
repayments of NIS 25 million in each of 2014, 2015, 2016, and 2017).
Since January 2013, the Company has made early repayments of bank loans
in the total amount of NIS 717 million. In May 2014, the Company entered
into a NIS 250 million deferred unsecured loan agreement for which the
principal financial undertakings are similar to those undertaken in
previous bank loans. The loan principal will be granted in December
2016.”

Key Financial Results6(unaudited)

NIS MILLION (except EPS)

Q2'14

Q2'13

% Change

Revenues

1,087

1,130

-4%

Cost of revenues

824

878

-6%

Gross profit

263

252

+4%

Operating profit

118

102

+16%

Profit for the period

46

20

+130%

Earnings per share (basic, NIS)

0.30

0.13

+131%

Free cash flow (before interest)

192

287

-33%

Key Operating Indicators:

Q2'14

Q2'13

Change

Adjusted EBITDA (NIS million)

291

280

+4%

Adjusted EBITDA as a percentage of total revenues

27%

25%

+2

Cellular Subscribers (end of period, thousands)

2,914

2,921

-7

Quarterly Cellular Churn Rate (%)

11.4%

9.4%

+2

Monthly Average Revenue per Cellular User(ARPU) (NIS)

76

83

-8%

Partner Consolidated Results (unaudited)

Cellular Segment

Fixed Line Segment

Elimination

Consolidated

NIS Million

Q2’14

Q2’13

Change %

Q2’14

Q2’13

Change %

Q2’14

Q2’13

Q2’14

Q2’13

Change %

Total Revenues

885

897

-1%

255

286

-11%

(53)

(53)

1,087

1,130

-4%

Service Revenues

667

726

-8%

248

277

-10%

(53)

(53)

862

950

-9%

Equipment Revenues

218

171

+27%

7

9

-22%

-

-

225

180

+25%

Operating Profit

78

59

+32%

40

43

-7%

-

-

118

102

+16%

Adjusted EBITDA

211

198

+7%

80

82

-2%

-

-

291

280

+4%

Financial Review (Consolidated)

In Q2 2014, total revenues were NIS 1,087 million (US$ 316
million), a decrease of 4% from NIS 1,130 million in Q2 2013.

Service revenues in Q2 2014 totaled NIS 862 million (US$ 251
million), a decrease of 9% from NIS 950 million in Q2 2013.

Service revenues for the cellular segment in Q2 2014 were NIS 667
million (US$ 194 million), a decrease of 8% from NIS 726 million in Q2
2013. The decrease was mainly the result of the continued price erosion
of Post-Paid and Pre-Paid cellular services due to the intense
competition, partially offset by an increase in revenues from national
roaming services.

Service revenues for the fixed line segment in Q2 2014 totaled
NIS 248 million (US$ 72 million), a decrease of 10% compared with NIS
277 million in Q2 2013. The decrease mainly reflected price erosion in
fixed line services including local calls, international calls and
internet services, as well as a decrease in interconnect revenues
following a reduction in the fixed line interconnect tariff in December
2013.

Equipment revenues in Q2 2014 totaled NIS 225 million (US$ 65
million), an increase of 25% compared with NIS 180 million in Q2 2013.
The growth was due primarily to an increase in the number of equipment
devices sold.

Gross profit from equipmentsales in Q2 2014 was NIS 58
million (US$ 17 million), compared with NIS 9 million in Q2 2013, an
increase of NIS 49 million. The increase resulted primarily from
improved profit margins, in addition to the increase in the number of
devices sold.

Operating expenses (‘OPEX’, including cost of service revenues,
selling, marketing and administrative expenses and excluding
depreciation and amortization) totaled NIS 642 million (US$ 187 million)
in Q2 2014, a decrease of 8% or NIS 58 million from Q2 2013. The
decrease largely reflected the impact of the efficiency measures
undertaken in the last twelve months as well as lower interconnect
expenses partially due to the reduction in the fixed line interconnect
tariff by approximately 60% in December 2013. Operating expenses
including depreciation and amortization expenses in Q2 2014 decreased by
7% compared with Q2 2013.

Adjusted EBITDA in Q2 2014 totaled NIS 291 million (US$ 85
million), an increase of 4% from NIS 280 million in Q2 2013.

Adjusted EBITDA for the cellular segment was NIS 211 million (US$ 61
million) in Q2 2014, increasing by 7% from NIS 198 million in Q2 2013,
reflecting the impact of lower operating expenses and higher gross
profit from equipment sales, partially offset by the decrease in service
revenues. As a percentage of total cellular revenues, Adjusted EBITDA
for the cellular segment in Q2 2014 was 24%, compared to 22% in Q2 2013.

Adjusted EBITDA for the fixed line segment decreased by 2% from NIS 82
million in Q2 2013 to NIS 80 million (US$ 23 million) in Q2 2014,
reflecting the decline in service revenues partially offset by lower
operating costs and the increase in gross profit from fixed line
equipment sales. As a percentage of total fixed line revenues, Adjusted
EBITDA for the fixed line segment in Q2 2014 was 31%, compared with 29%
in Q2 2013.

Finance costs, net in Q2 2014 were NIS 49 million (US$ 14
million), a decrease of 31%, compared with NIS 71 million in Q2 2013.
The decrease was mainly a result of a decrease in interest expenses
resulting from the lower level of average debt (see Funding and
Investing Review below), as well as lower linkage expenses due to the
lower CPI (Consumer Price Index) level, and a decrease in losses from
foreign exchange movements.

Profit in Q2 2014 was NIS 46 million (US$ 13 million), an
increase of 130% compared with profit in Q2 2013 of NIS 20 million. The
increase in profit reflects both the increase in Adjusted EBITDA and the
lower finance costs, net.

Based on the weighted average number of shares outstanding during Q2
2014, basic earnings per share or ADS, was NIS 0.30 (US$ 0.08),
an increase of 131% compared to NIS 0.13 in Q2 2013.

The effective taxrate for Q2 2014 was 33%, compared with
35% in Q2 2013. The decrease in the effective tax rate was mainly due to
the lower percentage of unrecognized expenses than in the comparable
quarter last year, due to the increase in profit before tax.

Cellular Segment Operational Review

At the end of the second quarter 2014, the Company's cellular
subscriber base (including mobile data and 012 Mobile subscribers)
was approximately 2.91 million, including approximately 2.14 million
Post-Paid subscribers or 73% of the base, and approximately 776 thousand
Pre-Paid subscribers, or 27% of the subscriber base.

During the second quarter of 2014, the cellular subscriber base declined
by approximately 22,000 subscribers. While the Pre-Paid subscriber base
decreased by approximately 23,000 subscribers, the Post-Paid subscriber
base increased by approximately 1,000 subscribers.

The quarterly churn rate for cellular subscribers in Q2 2014 was
11.4%, compared with 9.4% in Q2 2013 (and 11.6% in Q1 2014), with the
increase compared with Q2 2013 reflecting the intense competition in the
cellular market.

Total cellular market share (based on the number of subscribers)
at the end of Q2 2014 was estimated to be approximately 29%, unchanged
from the end of Q1 2014.

The monthly Average Revenue per User (“ARPU”) for cellular
subscribers in Q2 2014 was NIS 76 (US$ 22), a decrease of 8% from NIS 83
in Q2 2013 and a decrease of 1% from NIS 77 in Q1 2014. The decrease in
ARPU compared to the comparable quarter mainly reflects the continued
price erosion due to the intense competition in the market, as described
above. The decline in ARPU compared to the previous quarter resulted
primarily from continued price erosion of cellular services, partially
offset by an increase in revenues from national roaming services.

Cash generated from operations decreased by 30% to NIS 289
million (US$ 84 million) in Q2 2014 from NIS 415 million in Q2 2013.
This was mainly explained by changes in operating working capital,
partially offset by the increase in profit. Operating working capital in
Q2 2014 increased by NIS 7 million compared with a decrease of NIS 95
million in Q2 2013, largely reflecting a smaller decrease in trade
receivables.

The level of cash capital expenditures in fixed assets (CAPEX)
including intangible assets but excluding capitalized subscriber
acquisition and retention costs, net, was NIS 98 million
(US$ 29 million) in Q2 2014, a decrease of 20% from NIS 122 million in
Q2 2013.

Net debt at the end of Q2 2014 amounted to NIS 2,735 million (US$
796 million), compared with NIS 3,446 million at the end of Q2 2013, a
decrease of NIS 711 million. In April 2014, the Company made an early
repayment of bank loans totaling NIS 100 million (whose original
repayment schedule was for repayments of NIS 25 million in each of 2014,
2015, 2016, and 2017).

On May 27, 2014, the Company engaged in a deferred unsecured loan
agreement with a group of institutional corporations. According to the
agreement, in December 2016, these institutional corporations will grant
Partner a loan in a principal amount of NIS 250 million.7

Business and Regulatory Developments

Business Developments

Amendments to the Company's Equity Incentive Plan

On June 18, 2014, the Company's Board of Directors approved certain
amendments to the Company's Equity Incentive Plan (the "Plan").
The main amendments to the Plan include: (a) the extension of the Plan
for an additional ten years from July 2014 until July 2024; (b) the
increase of the number of shares which may be granted under the Plan by
6 million shares, which represents approximately 3.75% of the Company's
issued share capital as of June 18, 2014; and (c) the addition of the
ability to allocate restricted shares to the Company's employees and
officers and necessary related amendments to the Plan (in particular,
regarding the right to vote at the general meetings of shareholders and
the right to receive dividends distributed with respect to the
restricted shares).

Regulatory Developments

1.Relief Regulations under the Centralization Law

On June 11, 2014, the Promotion of Competition and the Reduction of
Centralization Regulations (type of company which is not a layer company
and provisions regarding the attribution of control), 5774-2014 (the "Relief
Regulations") entered into effect (the Relief Regulations were
published in the official gazette on July 21, 2014). The Relief
Regulations exempt companies that fulfill certain conditions from the
provisions of Section 25(d) of the Promotion of Competition and the
Reduction of Centralization Law, 5774-2014 (the "Centralization
Law"), with respect to strict corporate governance constraints on
the Board structure of layer corporations during the interim period
(until the implementation of the provisions of the CentralizationLaw
regarding the reduction of the pyramid structures to only two layers).

Based on the Relief Regulations and in accordance with the information
that has been published by the Company's two main shareholders (S.B.
Israel Telecom Ltd. and Scailex Corporation Ltd.) with respect to their
holdings and the agreements between them, and in light of the Israel
Securities Authority's (ISA) decision, according to which the ISA staff
does not consider the Israeli entities that hold Company shares in
accordance with the terms of the Company's MRT license as controlling
parties of the Company, Partner meets the conditions set forth in the
Relief Regulations and is not required to comply with the strict
corporate governance constraints during the interim period set forth in
the Centralization Law.

For further information, see the Company's Annual Report on Form 20-F
for the year ended December 31, 2013 ("2013 Annual Report"),
"Item 3. Key Information - 3D. Risk Factors - 3D.1 Risks relating to the
regulation of our industry - 3D.1j - New legislation in Israel to
promote competition and reduce concentration of control over businesses
may adversely affect the expansion of our business, require changes in
our shareholder base, affect our share price and limit our ability to
obtain bank credit" and "Item 4. Information on the Company - 4B.
Business Overview - 4B.13 Regulation - 4B.13d Regulatory Developments -
4B.13d-vi The Promotion of Competition and the Reduction of
Centralization Law".

2.Ministry of Communications Hearings and Decisions

a)Hearing regarding operational continuity during a state of
emergency

On June 24, 2014, the Ministry of Communications (the “MOC”)
published a hearing regarding operational continuity during a state of
emergency, which determines, among other things, that certain
telecommunications licensees, including the Company, must formulate a
plan to be approved by the board of directors, that would guarantee the
ability of the licensee to operate continuously and limit the impact on
the supply of telecommunications services during a state of emergency.

In order to guarantee operational continuity, it is proposed as part of
the hearing to determine various provisions with respect to network
back-up, electrical and energy infrastructure, customer service
operations and information technology security. For example, it is
proposed that the network will be planned with no single point of
failure and that the licensee will have independent capabilities to
supply electrical power through independent generators to at least 3% of
all its cellular sites.

b)Hearing regarding roaming services abroad

On August 12, 2014 the MOC published a hearing aimed at increasing
competition in roaming services abroad currently provided by cellular
licensees. As part of the hearing, the MOC proposes to enable every
cellular subscriber to receive roaming service abroad from operators who
are not his cellular provider while keeping his cellular number. These
alternative roaming providers include other cellular licensees, MVNOs,
ISPs, International call licensees and fixed telephony licensees.

The MOC also suggests to determine various measures intended to improve
transparency and to limit subscriber payments only to the exact volume
of services consumed. Such measures include:

1. All roaming calls abroad (incoming and outgoing) would be billed
using time units of 1 second;

2. All roaming data sessions would be billed using volume units of 1KB;

3. The billable duration of all voice calls would be from the second in
which the call was connected and until it ended (explicitly excluding
any wait period from pushing the "call" button until the call is
connected).

The parties to the hearing are allowed to submit their responses to the
proposed measures by September 20, 2014. The Company is studying the
content of the hearing and is preparing for the submission of its
response. At this stage, the Company is unable to evaluate the scope of
investments and expenses required in order to comply with the proposed
measures, or their impact on revenues, insofar as these measures will be
adopted "as is" at the end of this hearing process.

c)Decision regarding Premium Rate Services

The Ministry of Communications' decision in a hearing regarding the
provision of premium rate services, which applies to certain
telecommunications licensees, including the Company, will become
effective as of October 24, 2014. In the Ministry of Communications’
decision it was determined, among other things, that all premium rate
services must be provided through only three prefixes, two of which
shall be blocked as a default. The relevant licensees would be required
to announce at the beginning of each premium rate call the nature of the
service, its rate and maximum cost (and that such costs are in addition
to the usual charges). The subscriber would be required to actively
agree to accept the service (by pressing the digit 3) in order to
receive the service. The Company's revenues may be adversely affected as
a result of this decision.

For further information, see the 2013 Annual Report, "Item 4.
Information on the Company - 4B. Business Overview - 4B.13 Regulation -
4B.13d Regulatory Developments - 4B.13d-ix Hearings and Examinations".

Conference Call DetailsPartner
will hold a conference call on Wednesday, August 13, 2014 at 10.00 a.m.
Eastern Time / 5.00 p.m. Israel Time.To join the call,
please dial the following numbers (at least 10 minutes before the
scheduled time):International: +972.3.918.0644North America
toll-free: + 1.888.281.1167A live webcast of the call will also be
available on Partner's Investors Relations website at: www.orange.co.il/en/Investors-Relations/lobby/If
you are unavailable to join live, the replay of the call will be
available fromAugust 13, 2014 until August 20, 2014, at the
following numbers:International: +972.3.925.5930North
America toll-free: +1.888.295.2634In addition, the archived
webcast of the call will be available on Partner's Investor Relations
website at the above address for approximately three months.

Forward-looking statementsThis
press release includes forward-looking statements within the meaning of
Section 27A of the US Securities Act of 1933, as amended, Section 21E of
the US Securities Exchange Act of 1934, as amended, and the safe harbor
provisions of the US Private Securities Litigation Reform Act of 1995.
Words such as "believe", "anticipate", "expect", "intend", "seek",
"will", "plan", "could", "may", "project", "goal", "target" and similar
expressions often identify forward-looking statements but are not the
only way we identify these statements. In particular, this press release
contains forward-looking statements regarding the anticipated offering
by the Company of 4G services, and expected changes in the regulatory
environment.In addition, all statements other than statements of
historical fact included in this press release regarding our future
performance, plans to increase revenues or margins or preserve or expand
market share in existing or new markets, plans to reduce expenses, and
any statements regarding other future events or our future prospects,
are forward-looking statements.We have based these
forward-looking statements on our current knowledge and our present
beliefs and expectations regarding possible future events. These
forward-looking statements are subject to risks, uncertainties and
assumptions about recent and future regulatory actions (specifically,
whether the regulatory changes will occur and what their impact on
Partner will be), as well as consumer habits and preferences in cellular
telephone usage, trends in the Israeli telecommunications industry in
general, and the impact of global economic conditions. Future results
may differ materially from those anticipated herein. For further
information regarding risks, uncertainties and assumptions about
Partner, trends in the Israeli telecommunications industry in general,
the impact of current global economic conditions and possible regulatory
and legal developments, and other risks we face, see "Item 3.Key
Information - 3D. RiskFactors", "Item 4. InformationontheCompany", "Item 5. OperatingandFinancialReviewandProspects", "Item 8.
Financial Information - 8A. Consolidated Financial Statements and Other
Financial Information - 8A.1 Legal and Administrative Proceedings" and
"Item 11. Quantitative and Qualitative Disclosures about Market Risk" in
the Company's Annual Reports on Form 20-F filed with the SEC, as well as
its current reports on Form 6-K furnished to the SEC.We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.

The financial results presented in this press release are unaudited
financial results.The results were prepared in accordance
with IFRS, other than Adjusted EBITDA and free cash flow, which are
non-GAAP financial measures.The financial information is
presented in NIS millions (unless otherwise stated) and the figures
presented are rounded accordingly.

The convenience translations of the New Israeli Shekel (NIS) figures
into US Dollars were made at the rate of exchange prevailing at June 30,
2014: US $1.00 equals NIS 3.438. The translations were made purely for
the convenience of the reader.

Use of Non-GAAP Financial Measures‘Adjusted
EBITDA’ represents earnings before interest (finance costs, net), taxes,
depreciation, amortization (including amortization of intangible assets,
deferred expenses-right of use, and share based compensation expenses)
and impairment charges, as a measure of operating profit. Adjusted
EBITDA is not a financial measure under IFRS and may not be comparable
to other similarly titled measures provided by other companies. Adjusted
EBITDA may not be indicative of the Company’s historic operating results
nor is it meant to be predictive of potential future results. Adjusted
EBITDA is presented solely to enhance the understanding of our operating
results. We use the term “Adjusted EBITDA” to highlight the fact that
amortization includes amortization of deferred expenses – right of use
and employee share-based compensation expenses, but Adjusted EBITDA is
fully comparable to EBITDA information which has been previously
provided by Partner for prior periods. Reconciliation between our net
cash flow from operating activities and Adjusted EBITDA on a
consolidated basis is presented in the attached summary financial
results.

About Partner Communications

Partner Communications Company Ltd. ("Partner") is a leading Israeli
provider of telecommunications services (cellular, fixed-line telephony
and internet services) under the orange™ brand and the 012 Smile brand.
Partner’s ADSs are quoted on the NASDAQ Global Select Market™ and its
shares are traded on the Tel Aviv Stock Exchange (NASDAQ and TASE: PTNR).
For more information about Partner, see: www.orange.co.il/en/Investors-Relations/lobby/

(2) Adjusted EBITDA as reviewed by the CODM, represents Earnings Before
Interest (finance costs, net), Taxes, Depreciation, Amortization
(including amortization of intangible assets, deferred expenses-right of
use, and share based compensation expenses) and impairment charges, as a
measure of segment profit. Adjusted EBITDA is not a financial measure
under IFRS and may not be comparable to other similarly titled measures
in other companies. Adjusted EBITDA may not be indicative of the Group's
historic operating results nor is it meant to be predictive of potential
future results. The usage of the term "Adjusted EBITDA" is to highlight
the fact that the Amortization includes amortization of deferred
expenses – right of use and employee share based compensation expenses;
it is fully comparable to EBITDA information which has been previously
provided for prior periods.

* Representing an amount of less than 1 million** The convenience
translation of the New Israeli Shekel (NIS) figures into US dollars was
made at the exchange prevailing at June 30, 2014: US $1.00 equals 3.438
NIS*** Financial expenses excluding any charge for the
amortization of pre-launch financial costs

Key Financial and Operating Indicators
(unaudited)8

NIS M unless otherwise stated

Q2' 12

Q3' 12

Q4' 12

Q1' 13

Q2' 13

Q3' 13

Q4' 13

Q1' 14

Q2' 14

2012

2013

Cellular Segment Service Revenues

949

892

788

724

726

738

719

680

667

3,592

2,907

Cellular Segment Equipment Revenues

207

157

209

176

171

160

196

220

218

896

703

Fixed Line Segment Service Revenues

300

296

294

283

277

267

258

247

248

1,210

1,085

Fixed Line Segment Equipment Revenues

8

8

13

7

9

7

9

7

7

36

32

Reconciliation for consolidation

-36

-38

-46

-46

-53

-54

-55

-51

-53

-162

-208

Total Revenues

1,428

1,315

1,258

1,144

1,130

1,118

1,127

1,103

1,087

5,572

4,519

Gross Profit from Equipment Sales

33

16

22

4

9

10

19

45

58

113

42

Operating Profit

245

217

155

95

102

109

103

99

118

865

409

Cellular Segment Adjusted EBITDA

367

328

256

186

198

201

199

199

211

1,314

784

Fixed Line Segment Adjusted EBITDA

56

73

84

82

82

83

83

75

80

288

330

Total Adjusted EBITDA

423

401

340

268

280

284

282

274

291

1,602

1,114

Adjusted EBITDA Margin (%)

30%

30%

27%

23%

25%

25%

25%

25%

27%

29%

25%

OPEX

853

793

744

720

700

696

675

661

642

3,262

2,791

Finance costs, net

73

68

38

49

71

53

38

24

49

234

211

Profit (Loss)

120

110

102

31

20

38

46

52

46

478

135

Total Dividend Declared

160

-

-

-

-

-

-

-

-

160

-

Capital Expenditures9

113

125

121

130

122

116

107

113

98

492

475

Free Cash Flow

313

375

323

203

287

273

278

145

192

1,234

1,041

Free Cash Flow After Interest

270

310

255

192

193

266

209

139

123

1,034

860

Net Debt

4,209

4,072

3,812

3,622

3,446

3,208

3,000

2,849

2,735

3,812

3,000

Cellular Subscriber Base (Thousands)

3,098

3,042

2,976

2,932

2,921

2,950

2,956

2,936

2,914

2,976

2,956

Post-Paid Subscriber Base (Thousands)

2,198

2,145

2,102

2,102

2,103

2,127

2,133

2,137

2,138

2,102

2,133

Pre-Paid Subscriber Base (Thousands)

900

897

874

830

818

823

823

799

776

874

823

Cellular ARPU (NIS)

101

97

87

82

83

84

81

77

76

97

83

Cellular Churn Rate (%)

8.9%

10.4%

10.9%

10.4%

9.4%

8.8%

10.7%

11.6%

11.4%

38%

39%

Number of Employees (FTE)

6,961

6,102

5,396

4,772

4,377

4,153

4,045

3,826

3,736

5,396

4,045

1The financial results presented in this press release
are unaudited.2Operating expenses include cost
of service revenues, and selling, marketing & administrative expenses,
and exclude depreciation and amortization and impairment charges.3For definition of Adjusted EBITDA measure, see “Use of Non-GAAP
Financial Measures” below.4Total long term
indebtedness including current maturities less cash and cash equivalents.5Cash flows from operating activities before interest payments, net of
cash flows used for investment activities.6See
also definitions in footnotes 2-5.7For
additional information on the terms of the loan, please refer to the
press release and corresponding 6K filing dated May 27, 2014.8See first page for definitions. Including the results of 012 Smile
from March 2011. 2011 and 2012 annual numbers are audited.9Cash capital expenditures in fixed assets including
intangible assets but excluding capitalized subscriber acquisition and
retention cost, net.